African Bank ‘Kept Lending to Indebted Customers’

{{Unemployed construction worker Daniel isn’t sure how he fell so deeply in debt.}}

All he knows is that African Bank, which was bailed out this month, kept offering him money and he kept taking.

“I can’t remember now, I can’t remember each and every cent I spent,” he said.

At 62 and with a junior high school education, he admits he doesn’t understand how interest works.

For years African Bank made high-interest loans to millions of lower-income, black South Africans like Daniel.

This happened even when bank statements produced to obtain the loan showed they would have struggled to service their debts, according to court documents in cases brought by the bank against defaulting borrowers.

Daniel’s R226 000 of debt became the South African taxpayer’s problem on August 10, when the SA Reserve Bank (Sarb) said it would buy Abil’s R17bn bad loan portfolio after the lender revealed it would make a full-year loss and needed to raise more capital for the second time in a year.

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